The New York Times’s $99,000 question

The New York Times revealed the first glimpse of the results of its paywall yesterday. The newspaper said that the results were “encouraging”.

In a news release and a web cast for Wall Street nary a discouraging word was heard, but no matter how you slice up the numbers, the decision to charge web readers seems risky.

If I were a Times executive, I’d be scared. If I were a Times shareholder, I’d be mad. As a Times reader, I am sad because it’s possible that this great newspaper might just go away, as many no doubt will do before the news industry finally adjusts to the digital world.

The Times was skimpy with details about its subscribers and about the number of people who visit the Times on the web. In the question/answer part of the web cast, the Times management simply did not answer any questions about the paywall. To hear them tell it, everything is working out better than they expected, but they don’t say much about what did happen and nothing about what they expected.

Here’s how I add it up:

The company said it had gotten 100,000 paying digital subscribers in the first three weeks. It’s impossible to imagine that many of them are paying more than the 99-cent-for-four-weeks introductory offer. That’s the price on the signup page. Some people might have paid more since registered Times readers were sent various longer term offers: on the day after the paywall started, 25% off for a year, and a week later, 50% off for a half year. The total income for the paper in dollars can’t be much more than $99,000. The regular prices for a four-week subscription are $15 and up.

The risk, of course, comes in the possibility that digital advertisers will not appreciate any significant loss in digital readers. The Times advertising is big business. The amount of ads sold by the Times Company news operations amounted to $298 million in the three months just before the paywall, down almost $14 million from a year earlier. The gain from digital subscriptions looks like peanuts in the big picture.

What about the Times’s web traffic? This is tricky business. The only people who know the full story are employed by the Times. They acknowledge that traffic is down, but give no clue about the size of the decline.

And any decline in digital readers has to be looked at in terms of several factors:

The low cost introductory offers, which may or may not end soon.

The free pass for any reader to see 20 articles a month without charge.

The unlimited free pass for any reader who visits the Times from Twitter or Facebook.

The limited free pass for any reader who visits the Times from a search engine.

Numerous ways to avoid the paywall, most of which will be easy for the Times to close off the moment the paper finds it in its best interests to do so.

For myself, I haven’t reached the paywall limit. Before the paywall, I often looked at many Times stories out of idle curiosity. I’ve basically stopped, saving my 20 freebies. I have no idea if that’s remotely typical.

There are several businesses that sell detailed web analyses, and occasionally make some information available to the public.

Hitwise, owned by Experian, the credit reporting people, compared 12 days of Times web traffic in early March with 12 days in early April for a before-and-after snapshot. Day by day the declines ranged from 5% to 15%, except for one day in which there was a 7% increase.

These numbers are hard to interpret. It’s obvious that between the freebies and discounts, these early weeks are no test of the paywall. It’s less obvious, but news reading fluctuates wildly depending on what’s happening in the world. Sometimes events — like Egypt, Libya and Japan — are compelling. Sometimes they’re completely ignorable. No 12 days will ever compare to any other 12 days, ever.

Alexa, a web information company, makes available a variety of daily statistics on any large web site. Its page on the Times’s web site shows a pretty clear decline over the last month. Alexa allows comparisons among web pages. Here we have a comparison of pageviews for the Times (in blue) versus CNN (in red). You can easily see the volatility of the news in the CNN graph, but you can also see that in recent days there has been an increase of readers on CNN compared with a decline of those on the Times for the same news.

When the paywall began, the Times was No. 22 in traffic in the United States. It’s now No. 25. Alexa also shows that a slight rising trend in the number of people who look at only one story on the Times. Of all the visitors tracked by Alexa, 58.5% saw one page only, which is usually less than a full story, since most articles are spread over two or more pages.

The methods used by both companies come with caveats. Hitwise is largely a survey of traffic handled by some ISPs. They track, anonymously of course, 25 million people. Alexa largely relies on a smaller sample of around 1 million, using individuals who use its toolbar. Thus, both are more or less biased samples.

It’s clear that the Times wants some breathing room to ease into charging its readers.

All newspapers will eventually have to change in order to survive. They’ve been suffering from declines in readers and declines in advertisers for years. The recession really put them under tremendous pressure. The thing about the Times’s decision to impose a paywall now, and at the announced price, strikes me as strange given the fact that there is a lot of competition, and the fact that digital advertising at the Times is actually up.

The financial information about the Times all comes from its first quarter profit and loss news release, which does not have enough detail to separate digital ad income from print ad income, but the newspaper says the digital increases fail to offset the losses of print ads.

One thing we do know. No one will be able to maintain a large news gathering operation without income. It’s a canard for the established news industry to blame the news aggregators on the web. The problems are deeper than that.

One Response

A friend of mine works at the NYT, has been there about 20 years. I get routine reports on just how badly Pinch is running the family business into the ground, one astoundingly boneheaded move after the next, too many for me to list here.

My guess is that, eventually, the family will be forced to toss him overboard and sell the paper, maybe to Bloomberg?

If that happens, wouldn't every NYC daily be owned by a billionaire or a near-billionaire? Bloomberg, Murdoch, Zuckerman? I'll let you crunch those potential numbers, Mr B. Just my 2¢, plain…

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I was a newspaperman for many years, last at the New York Times and before then at the Wall Street Journal. Something happened in the 1990s and I became fascinated with computers, went back to school and wound up with a PhD in computer science.